50 F.

3d 1

NOTICE: First Circuit Local Rule 36.2(b)6 states unpublished

opinions may be cited only in related cases.
UNITED STATES of America, Plaintiff, Appellee,
v.
Stanley LABOVITZ, Defendant, Appellant.
No. 94-1725.

United States Court of Appeals,

First Circuit.
Mar. 28, 1995.

Appeal from the United States District Court for the District of
Massachusetts [Hon. Nathaniel M. Gorton, U.S. District Judge ]
Stanley Labovitz on brief pro se.
Donald K. Stern, United States Attorney, and Mark J. Balthazard,
Assistant United States Attorney, on brief for appellee.
D.Mass.
AFFIRMED.
Before TORRUELLA, Chief Judge, BOUDIN and STAHL, Circuit
Judges.
PER CURIAM.

On December 6, 1993, appellant Stanley Labovitz pleaded guilty to thirteen

counts of bankruptcy fraud. Approximately eleven weeks later, still before
sentencing, appellant moved to withdraw his plea pursuant to Fed. R. Crim. P.
32(d). The district court denied this motion and subsequently imposed sentence.
This appeal followed. For the following reasons, we affirm.

BACKGROUND

During the 1980's, appellant was an attorney practicing bankruptcy and debtcollection law. Appellant also invested in real estate, and he owned or
controlled various real estate entities including Hartwell Realty Corporation
("Hartwell"), 316 Main Street, Inc. ("316 Main"), and S.S.L., Inc. ("S.S.L.").
On April 27, 1993, a federal grand jury returned an indictment charging
appellant with twenty-three counts of bankruptcy fraud. See 18 U.S.C. Sec.
152. In particular, the indictment charged appellant with engaging in a scheme
to defraud by filing bankruptcy petitions for Hartwell, 316 Main, S.S.L., and
himself personally, and thereafter transferring and concealing assets. The
indictment also charged him with providing materially false information in
connection with these petitions.

On December 3, 1993, appellant entered into a plea agreement with the

government under which he agreed to plead guilty to counts 1, 3, 7-8, 10, and
16-23 of the indictment. The change of plea hearing was held on December 6,
1993. At the hearing, the prosecutor summarized the evidence the government
would have presented at trial. The district court accepted the change of plea and
set a date for sentencing. On February 24, 1994, appellant filed a motion to
withdraw his guilty plea. In his motion, he primarily argued that the district
court's plea colloquy failed to comply with the requirements of Fed. R. Crim. P.
11. Following a hearing on March 25, 1994, the district court orally denied this
motion on the grounds that there is no "fair and just reason" to allow the
withdrawal.

A sentencing hearing was conducted, and sentence was imposed, on June 16,
1994. In the course of the hearing, the district court made specific findings that
the amount of loss was $137,217.00 on Count 1; $34,356.67 on Count 7;
$26,758.26 on Count 20, $5,206.89 on Count 21; and $25,000.00 on Count 22.
As a result, the district court, acting pursuant to U.S.S.G. Sec. 2F1.1, adjusted
appellant's base offense level of 6 upward by 8 levels to reflect a loss of
between $200,000.00 and $350,000.00.1 The court imposed a fifteen month
sentence of imprisonment, the bottom end of the applicable guideline range,
followed by a period of supervised release. The court also ordered restitution of
$231,573.67.

DISCUSSION
5 THE DENIAL OF APPELLANT'S MOTION TO WITHDRAW HIS GUILTY
A.
PLEA.
6

A district court "may permit" a defendant to withdraw his guilty plea prior to
sentencing for any "fair and just" reason. United States v. Daniels, 821 F.2d 76,

78 (1st Cir. 1987); Fed. R. Crim. P. 32(d). We have recently reiterated that:
7
There
are several factors to consider in determining whether a defendant has met this
burden, the most significant of which is whether the plea was knowing, voluntary
and intelligent within the meaning of Rule 11. The other factors include: 1) the force
and plausibility of the proffered reason; 2) the timing of the request; 3) whether the
defendant has asserted his legal innocence; and 4) whether the parties had reached a
plea agreement.
8

United States v. Cotal-Crespo, 1995 WL 27378 at * 1 (1st Cir. Jan. 30, 1995)
(citations omitted). We will reverse the district court only for an error of law or
for demonstrable abuse of discretion. Id. at * 3. We do not think that reversal is
warranted here.2

Appellant argues that the district court erred in requiring him to provide a
"strong" rather than "fair and just" reason for withdrawal, and that it unfairly
held him to this higher standard because he was an attorney. We find no error.
Appellant had argued below, inter alia, that the district court failed to
adequately inform him of, and determine that he understood, the nature of the
charges. See Fed. R. Crim. P. 11(c). The district court was entitled to consider
appellant's background and sophistication in determining whether these core
concerns of Rule 11 were satisfied. See United States v. Allard, 926 F.2d 1237,
1245 (1st Cir. 1991) ("The manner in which the charge is explained and the
method for determining the defendant's understanding necessarily vary from
case to case depending upon the capacity of the defendant and the attendant
circumstances."). The court's ruling on the motion to withdraw leaves no doubt
that it evaluated the motion under the correct legal standard, and that it denied
the motion because it found no "fair and just" reason for withdrawal.

10

Appellant also argues that he should have been allowed to withdraw his guilty
plea because there was insufficient factual basis for it. See Fed. R. Crim. P.
11(f). In support of this argument, he draws our attention to various statements
he made at the change of plea hearing which could be construed as denials by
him that he had the intent to defraud. See United States v. Grant, 971 F.2d 799,
802 (1st Cir. 1992) (discussing elements of bankruptcy fraud). In addition,
appellant cites to various documents, appended to his brief, which he suggests
demonstrates his innocence of the crimes charged in counts 1 and 20.

11

It is well-settled that the prosecutor's statement of facts on the record can

satisfy the requirement of a factual basis for the plea. See, e.g., United States v.
Ray, 828 F.2d 399, 405-06 (7th Cir. 1987), cert. denied, 485 U.S. 964 (1988).
This statement of facts need not be uncontroverted. A court may accept a plea

even when the defendant protests his innocence if there is a strong evidence in
the record of the defendant's actual guilt. North Carolina v. Alford, 400 U.S. 25,
37 (1970); United States v. Walsh, 7 F.3d 1064, 1066 (1st Cir. 1993). Similarly,
when the district court establishes a sufficient factual basis for the plea at the
Rule 11 hearing, the guilty plea may stand even if the defendant later claims
innocence and challenges the plea. See United States v. Keiswetter, 860 F.2d
992, 998 (10th Cir. 1988) (Moore, J., dissenting); United States v. Owen, 858
F.2d 1514, 1516-17 & n.2 (11th Cir. 1988).
12

In the instant case, the prosecutor's proffer provided ample factual basis for
accepting the guilty plea. In this proffer, the prosecutor detailed a lengthy
pattern of omissions, material misstatements, and transfers of bankruptcy estate
property by appellant. Given the sheer number of "mistakes," the size of the
assets concealed, and appellant's many years of experience practicing
bankruptcy law, we think the judge was entitled to conclude that a substantial
basis existed for believing that appellant's actions were knowing and
fraudulent.3

13

The documents that appellant cites do not alter our conclusion. Count 1, which
relates to the Hartwell bankruptcy, charged appellant with failing to disclose
approximately $350,000.00 in loans owing to Hartwell from appellant and his
business partner. Appellant contends that there can be no fraudulent intent since
the final decision to treat the $350,000.00 as a loan to officers (rather than
compensation) was not made until November 1991, roughly ten months after he
filed Hartwell's bankruptcy petition.4 However, appellant should have disclosed
the asset even if its status at the time of filing was uncertain. See United States
v. Cherek, 734 F.2d 1248, 1254 (7th Cir. 1984) ("It is a reasonable reading of
18 U.S.C. Sec. 152 to conclude that the statute requires a bankrupt to disclose
the existence of assets whose immediate status is uncertain."), cert. denied, 471
U.S. 1014 (1985). Moreover, appellant did not disclose the asset even after
November 1991, and the indictment charged him with a "continuing failure" to
disclose through October 1992. Under the circumstances, the district court
could reasonably conclude that he was guilty.

14

Count 20, which relates to appellant's personal bankruptcy, charged him with
failing to disclose approximately $25,000 worth of Keystone Fund money
market shares which he owned. Appellant contends that various documents,
submitted to the district court at sentencing, prove his lack of fraudulent intent.
These documents indicate that in February 1986, appellant requested that these
shares be transferred to his wife. However, the government proffered evidence
that appellant received monthly statement and interest payments from
Keystone, mailed to his law office, both before and after filing his bankruptcy

petition in May 1992. Under the circumstances, there was a strong basis for
concluding that appellant knew the transfer had not occurred and intended to
conceal the asset. The fact that appellant reported the asset to the bankruptcy
trustee in February 1993, two months prior to his indictment, does not alter our
conclusion. There is evidence in the record which suggests that he knew by
then that he was under criminal investigation in connection with several
bankruptcy filings.
15

Finally, having determined that appellant's principal points are without merit,
we consider the traditional factors relevant to the review of a change of plea
request. The record reveals that appellant understood the substance of the
charges against him, and suggests that he made a calculated decision that it was
in his interest to plead guilty. The plea was part of a quid pro quo negotiated
with the government. See United States v. Pellerito, 878 F.2d 1535, 1541 (1st
Cir. 1989). A defendant is not entitled to withdraw his guilty plea simply
because he asserts a subjective belief in his innocence. See United States v.
Ramos, 810 F.2d 308, 312 (1st Cir. 1987). Given the totality of the
circumstances, we cannot say the district court abused its discretion in finding
no "fair and just reason" for retraction.

B. INEFFECTIVE ASSISTANCE OF COUNSEL.

16
17

Ordinarily, we do not address ineffective assistance of counsel arguments on

direct appeal. This case is no exception. Appellant argues that trial counsel was
ineffective because he pressured him into pleading guilty and misinformed him
that it was too late to change his mind after signing the plea agreement. These
charges depend upon evidentiary matters which are best considered by the
district court in the first instance. See United States v. Mala, 7 F.3d 1058, 1063
(1st Cir. 1993) (holding that absent extraordinary circumstances, fact specific
claims asserting ineffective assistance of counsel are not cognizable on direct
appeal), cert. denied, 114 S. Ct. 1839 (1994). Accordingly, appellant's claim of
inadequate assistance is not properly before us.

C. SENTENCING.
18
19

1. The District Court's Loss Calculation.

20

Appellant argues that the district court erred in determining the amount of loss.
He does not contest the district court's loss determination of $34,456.67 for
count 7. However, he contends that there was no loss at all involved in counts
1, 20, 21, and 22. Based on appellant's own calculation, the district court should
have adjusted the base offense level upward by 4 levels to reflect a loss of

between $20,000.00 and $40,000.00, rather than 8 levels to reflect a loss of

between $200,000.00 and $350,000.00. We find no basis for a remand.
21

The district court's loss determination of $137,217.00 for count 1 was based on
appellant's portion of the $350,000.00 loan, owing to Hartwell, which he failed
to disclose in Hartwell's bankruptcy documents. Appellant does not dispute that
he owed this amount to Hartwell. Instead, he contends that there was no
intended loss since it was not finally determined that the $137,217.00 was a
loan and, thus, a corporate asset, until some months after he filed Hartwell's
bankruptcy petition. He further argues that there was no actual loss to creditors
because Hartwell's assets, at least at the time of filing, exceeded its debts.

22

We think the district court could properly determine that there was both an
intended and actual loss of $137,217.00. The court could find an intended loss
of $137,217.00 because appellant continued to conceal this asset even after, by
his own admission, the final accounting determination was made. The court
could find an actual loss of $137,217.00 because, independent of any loss to
creditors, that much remained owing to the debtor and bankruptcy estate at the
time of sentencing. See United States v. Edgar, 971 F.2d 89, 95 (8th Cir. 1992)
(recognizing that in bankruptcy fraud, the three entities that can be injured are
the debtor, the bankruptcy estate, and the creditors).5

23

The district court's loss determination of $26,758.26 on count 20 was based on

the value of the Keystone shares appellant failed to disclose in his personal
bankruptcy documents. Appellant does not dispute the value of these shares.
Rather, he argues that there was no loss since he disclosed the Keystone Fund
to the bankruptcy court in February 1993, two months before his indictment.
We think the district court could properly find an intended loss of $26,758.26
for the same reasons, discussed above, that it could properly find an intent to
defraud.

24

Since appellant did not object at sentencing to the loss determination of

$5,206.89 on count 21, we review only for plain error. Fed. R. Crim. P. 52(b).
Based on facts which were uncontested below, the court was entitled to find
that appellant concealed his one hundred per cent ownership of Bass River
Management, Inc. when filing for personal bankruptcy, and that he later
transferred this amount from Bass River for his personal use.6 Under the
circumstances, there was no plain error in determining the loss to be $ 5,206.89.

25

We need not reach appellant's argument that the district court erred in finding a
loss of $25,000 on count 22. The total amount of loss involved in counts 1, 7,

20, and 22 already falls between $200,000.00 and $350,000.00. Accordingly,

any error in determining the loss for count 22 is harmless.
26

2. Restitution.

27

Appellant argues that the district court erred in failing to determine that he
could afford to make restitution. He points out that he is currently without
employment and has limited assets. Since this issue was not preserved below,
we review for plain error. When issuing a restitution order, the district court
must "consider" the financial condition of the defendant. 18 U.S.C. Sec.
3664(a). However, there is no requirement that the defendant be found able to
pay now. United States v. Lombardi, 5 F.3d 568, 573 (1st Cir. 1993). Appellant
is well-educated and worked successfully for many years. There is every
reason to expect that he will be gainfully employed in the future even if he is
unable to return to the practice of law. Significantly, the district court left the
payment schedule to be determined by probation. We are satisfied that the
district court considered appellant's financial situation, and that it did not abuse
its considerable discretion. Accordingly, we find no plain error in the court's
restitution order.

28

Affirmed.

The court then made a two level increase to reflect more than minimal planning
and a two level downward adjustment for acceptance of responsibility, to reach
a total offense level of 14. Based on appellant's criminal history category I, his
sentencing range was fifteen to twenty-one months

Arguably, an outright violation of Rule 11 might require the court to allow the
withdrawal of a guilty plea unless the violation was found to be harmless. See
United States v. Raineri, 42 F.3d 36, 41 (1st Cir. 1994). Here, however, we find
no violation of Rule 11 at all

We add that the district judge made a finding on the record that defendant's
plea of guilty is "supported by an independent basis in fact" for each of the
"essential elements" of the offense charged. We do not think that the judge's
question about the requisite mental state for bankruptcy fraud, asked at a later
proceeding, warrants an inference that he was confused about this element and
did not fulfill his duty under Rule 11(f)

In support of this claim, appellant draws our attention to two affidavits of Curtis
Feldman, accountant for Hartwell. Although these affidavits are outside the

record, we consider the information they contain because it was proffered to

the district court at sentencing. We note, however, that the remaining
documents appellant cites in connection with count 1-Hartwell's bankruptcy
petition and amendment-cannot inform our decision because they are not part
of the record on direct appeal. See Fed. R. App. P. 10(a)
5

There might be some complications with the loss finding because of appellant's
own stake in Hartwell, although we think those complications might be
answered in this case. The issue need not be pursued because appellant does not
advance his ownership interest in Hartwell as a ground for limiting the amount
of loss

Appellant does attempt to dispute on appeal that he transferred these funds from
Bass River. This challenge comes too late. We have repeatedly held that "facts
stated in presentence reports are deemed admitted if they are not challenged in
the district court." United States v. O'Connor, 28 F.3d 218, 222 (1st Cir. 1994)
(quoting United States v. Bregnard, 951 F.2d 457, 460 (1st Cir. 1991)). We add
that the documents appellant cites, copies of canceled checks written on Bass
Rivers' account, are not part of the record on direct appeal